SECTION A [30 Marks]

Employment and Labour Minister TW Nxesi announces minimum wage increases

Employment and Labour Minister TW Nxesi has announced that the National Minimum Wage (NMW) for each ordinary hour

worked has been increased from R20,76 to R21,69 for the year 2021 with effect from 01 March 2021.

The NMW legislation in South Africa came into effect on 01 January 2019 at a level of R20 per hour. In terms of the NMW

Act of 2018, the policy framework is a floor level below which no employee should be paid.

It is illegal and an unfair labour practice for an employer to unilaterally alter hours of work or other conditions of employment

in implementing the NMW. The NMW is the amount payable for the ordinary hours of work and does not include payment of

allowances (such as transport, tools, food or accommodation) payments in kind (board or lodging), tips, bonuses and gifts.

The Act of 2018 requires that the NMW Commission review the rates annually and make recommendations to the Minister

on any adjustment of the national minimum wage, while also reflecting on alternative views, including those of the public.

In considering the annual adjustment, the Commission consider the following factors: inflation, the cost of living, and the

need to retain the value of the minimum wage; gross domestic product; wage levels and collective bargaining outcomes;

productivity; ability of employers to carry on their businesses successfully; the operation of small, medium or micro-

enterprises and new enterprises; likely impact of the recommendation adjustment on employment or the creation of

employment.

Following a transitional phase, the farm worker sector has been aligned with the NMW rate of R21,69 per hour. The

domestic workers sector will be entitled to R19,09 per hour and could be expected to be aligned with the NMW when the

next review is considered.

Workers on expanded public works programme are entitled to R11,93 per hour and workers who have concluded

learnerships agreements are entitled to allowances as determined by the national qualifications framework level.

In line with the Basic Conditions of Employment Act (BCEA), the increase in the NMW will mean that wages prescribed in

the sectoral determinations that were higher than the NMW at its promulgation, must be increased proportionally to the

adjustment of the national minimum wage. Therefore, the Contract Cleaning; and Wholesale and Retail Sector will also

have their wages upwardly adjusted by 4,5 percent.

http://www.labour.gov.za/employment-and-labour-minister-tw-nxesi-announces-minimum-wage-increases

Accessed (22 June 2021)

Answer ALL the questions in this section.

Question 1 (20 Marks)

Apply the information in the article provided above, together with your knowledge of the market supply and demand curves

describe how the market will react to the introduction of a statutory minimum wage. Indicate what the likely effect would be

on the unemployment situation in South Africa if the minimum wage rate is set above the equilibrium wage rate.

Question 2 (5 Marks)

With the aid of a diagram explain the concept of labour market equilibrium

Question 3 (5 Marks)

Identify and explain two factors that influence a workers supply of labour